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The Law Firm That Asbestos Built

APF Fellow

It is moving day at the Philadelphia law firm of Shein and Brookman. Packing cartons spill out of offices into the hallways. The 11-man firm is about to leave its cramped quarters above a downtown bank and move to new offices in an opulent, historically certified brownstone building just off fashionable Rittenhouse Square.

The 4 1/2-story structure is being restored for the law firm. Vaulted staircases and ornamental fixtures are being refurbished. The crowning jewel of the new offices, according to senior partner Joseph D. Shein, will be a restored stained glass dome that dominates the historic building. At the center of the dome is the inscription: "Wisdom Hath Builded Her House."

There is a certain irony in that, for it quite accurately can be said of Shein and his partner, Melvin Brookman: Asbestos hath builded their law firm.

Until a few years ago, Shein and Brookman was a tiny firm, unknown to most of the rest of Philadelphia's legal community. All that changed as a result of an epidemic of asbestos diseases that broke out in the late 1960's and 1970's among former workers at Philadelphia area shipyards.

Today, the firm represents 2,500 people suing for damages caused by asbestos exposure, or about one-eighth of all the people with asbestos-injury lawsuits currently pending in the United States. Shein boasts his firm "has tried more (asbestos) cases than any other in the country and gotten more plaintiffs' verdicts." Those verdicts have produced monetary awards to the victims ranging from a low of $15,000 to three in excess of $1 million. There also have been numerous out-of-court settlements.

The law firm works entirely on a contingent-fee basis. That arrangement nets Shein and Brookman as much as 40 percent of whatever is paid to an asbestos victim.

About two new clients seeking compensation for injuries caused by asbestos exposure come into the office each week, down from the peak of four to six new clients added weekly until recently. The seven paralegals employed by the firm work exclusively on asbestos litigation. In 1982, the firm hired four lawyers away from the District Attorney's office just to help with its heavy trial schedule, and more attorneys will join the firm in its new offices in the near future.

"We can institute an asbestos suit within half-an-hour," boasts Shein. That's in large part due to the fact that a typical Shein and Brookman asbestos complaint is laden with boilerplate; only names and pertinent employment data are changed as necessary. Some critics of the firm's way of doing business -including a number of their legal colleagues -describe it as "litigation by Xerox" and maintain that a Shein and Brookman client often never meets his lawyer until just before his day in court. Such criticisms are dismissed by Shein as professional jealousy.

The firm publishes a newsletter to keep its clients informed of legal developments and is computerizing its massive files that include rosters of workers at the busy shipyards during World War II, when the bulk of the asbestos exposures occurred to workers fireproofing ships with asbestos, the various products used on the ships being refitted there, and other data vital to proving the injury claims. Bits and pieces of information and recollections of one client are cross-referenced for future use, if needed, to aid another.

Experience has paid off for the entire firm. "I can call in one of my paralegals now and say: Navy Yard, 1941-42,' and she'll know exactly whom to sue," says Shein. "That's because we've done this for eight years."

Shein and Brookman have turned asbestos litigation into a high-volume, assembly-line operation and reaped profits accordingly. They are not alone. All over the United States, other law firms -large and small -are realizing substantial revenues due to the multi-purpose fiber first used in this country in 1880, deemed hazardous by U.S. public health authorities in 1938, but not regulated until 1971.

The number of Americans exposed to asbestos is estimated at between 13 and 21 million, including 8 to 11 million American workers (many of them in the nation's shipyards), their families and others who inhaled or ingested asbestos. That exposure has produced a variety of injuries including scarring of the lungs, lung cancer and an always fatal malignancy called mesothelioma. Those injuries usually do not appear until two or three decades after contact with the asbestos fibers.

Although exposure to asbestos has been markedly reduced in the past two decades -cutting back the incidence of new cases of asbestos disease -the threat of harm from the once-popular product is not entirely eliminated. An estimated 30 million tons of asbestos remain in place in schools, buildings and factories and it must be maintained, repaired and disposed of -all of which involve some human exposure to the substance. "This material is another legacy," says Dr. Irving Selikoff, the nation's foremost authority on asbestos hazards, referring to the remaining asbestos.

Joseph Shein

Approximately 20,000 asbestos-related deaths will occur each year until the end of the century, according to Selikoff. (Shein says one or two of his clients die each week.) In 1978, the federal government predicted as many as 5.6 million Americans ultimately may die of cancer and other diseases caused by asbestos exposure.

That staggering death toll would represent nothing more than a terrible legacy of a substance widely used but little understood if it were not for one critical fact: Evidence exists that the largest manufacturer of asbestos products, the Johns-Manville Corp., and certain other asbestos makers, were aware as early as the 1930s that the fiber was hazardous to humans but failed to limit exposures or publicize the dangers. That, lawyers for the victims argue, constitutes negligence and is grounds for a lawsuit.

And lawsuits abound in courts around the United States. Litigation involving individual victims versus the asbestos makers as well as litigation among the manufacturers themselves and between the manufacturers and their insurers is expected to remain unresolved for years. Also in contention is the liability of the government, which specified the use of asbestos products in its ship repair work. The amount at stake, according to the American Insurance Association, could go as high as $150 billion. Thus, asbestos may come to represent this country's single most costly legal dispute, with a sizable percentage of all moneys paid out going to lawyers.

A 1983 study by The Rand Corporation's Institute for Civil Justice estimated that more than $1 billion already has been spent in litigation over asbestos. A total of $361 million was spent to resolve 3,800 claims prior to August, 1982. Of that, $133 million was spent on defense fees and $228 million was paid out to the victims. From that $228 million, according to the Rand survey, the plaintiffs paid their lawyers $95 million.

Calculated another way, the Rand study shows that for every $2.71 paid by asbestos makers and their insurers to resolve a claim (through trial, settlement or dismissal), the victim netted $1, lawyers for the defendant companies were paid $1, and the remaining 71 cents went to the victim's lawyers. That means that for every $1 million paid out, $630,000 goes to attorneys.

The asbestos industry measures the cost of litigation a bit differently. According to its figures, an asbestos victim receives only $1 for every $4 or $5 spent in the process of resolving a claim for compensation. The remainder pays his lawyer and the lawyers representing the asbestos company. One asbestos industry executive told a Congressional subcommittee in 1982 that it cost his firm $150,000 to put $28,000 into the pocket of a victim. That, asserted William G. McLaughlin of Unarco Industries of Chicago, a defendant in 12,000 asbestos lawsuits, is "an abomination."

As one might expect, the lawyers representing the victims pull no verbal punches on this subject either.

"Where do you think the victims would be without us?" asks an indignant Shein. He notes that asbestos giant Johns-Manville filed in court a schedule of payments it deemed fair compensation for asbestos injuries. Under that schedule, according to Shein, an individual with the deadly cancer mesothelioma would be paid a mere $30,000. Shein is quick to point out that a mesothelioma victim -represented by a lawyer -can go to court and win more than $1 million in damages.

On one thing the lawyers for the asbestos makers and the asbestos victims do agree, however: The deluge of asbestos litigation has brought to light serious -some say irreparable -flaws in the traditional system of tort law when it is applied to this unique type of personal injury claim.

That carries with it enormous implications, not only for asbestos victims, but also for the rapidly growing number of other Americans who have been injured by exposure to hazardous substances and want compensation from those responsible for their injuries. One need only scan daily newspaper headlines to realize the pervasiveness of the problem and the potential for lawsuits: community drinking water supplies contaminated with cancer-causing chemicals, discoveries of mutagenic properties in drugs and food additives, and harmful health effects of long-term exposure to products once considered safe.

"Toxic tort" lawsuits, as they are known, will increase exponentially in the future; they are the awesome price of America's consumption of substances about which it knows little. If the early experience with asbestos litigation is an accurate indicator -and many argue it is -the traditional system of tort law will prove wholly inadequate to equitably resolve these claims, mandating reform.

Why?

Consider a few of the problems of the victim of a toxic substance injury. Most such injuries do not manifest themselves until years after exposure. Thus, as with most asbestos claims, it becomes difficult to identify the manufacturer of the product, or even identify what product may have caused the injury.

Equally difficult for some victims is proving the injury was caused by exposure to a particular product. While some forms of asbestos disease (notably mesothelioma) are generally conceded to be caused only by asbestos, other diseases may have a variety of causes. Many former asbestos workers with lung cancer have been denied their claims for damages because they also were cigarette smokers, for example.

A number of victims fail in their efforts to win compensation because of strict statutes of limitations in their home states. In Pennsylvania, for example, claims must be filed within two years after a victim learns of his injury. Some victims have been advised of the presence of a spot on their lungs -which sets the time-clock on the statute of limitations running -but also were advised (usually by a company doctor) that the spots represented no hazard. Thus, when they did develop a serious problem, the statute had expired and they were barred from suing.

In December, a federal appeals court in Chicago stunned lawyers for asbestos victims by ruling that claims for damages must be filed within two years of exposure, despite the fact that it may take 20 years for injuries to develop. The 2-1 decision, which upheld Indiana's strict statute of limitations law, was decried by the dissenting judge as "a mockery of justice," but its impact is somewhat blunted because it applies only to Indiana.

To date, there have been more asbestos damage claims filed in America's courts than any other type of toxic tort. Philadelphia's common pleas court, for example, has 1,850 asbestos suits on its already jammed dockets. Five judges -one-third of the civil trial judiciary -have been assigned to handle the asbestos litigation.

The only substance currently regarded by experts as capable of coming close to generating that amount of litigation is the defoliant Agent Orange. About 10,000 injury claims alone have been filed in the U.S. District Court in New York by Vietnam veterans and their families. But claims for personal injuries caused by prescription drugs, industrial chemicals, radiation, household products, environmental contaminants and toxic wastes are appearing in large numbers on court dockets everywhere in the United States, and the issues raised by the asbestos litigation also are being raised in these cases. Any solutions applied to those problems may well be applied to other toxic tort litigation and thus warrant careful study and debate.

Victim Compensation

One of the most controversial will be whether these types of claims should be diverted from the nation's courts into a special victim compensation system of their own -akin to existing worker compensation programs -where, among other things, the role played by lawyers and the courts would be reduced.

Such a reform is being backed strongly by the asbestos industry and is incorporated, with several critical differences, in legislation sponsored by U.S. Rep. George Miller (D.-Calif.). Miller has been trying for several years to spur his colleagues in Washington into action on asbestos compensation, but has been unable to generate much interest. It was generally conceded that Manville Corp.'s decision to file for bankruptcy in 1982 was an attempt to force Congressional intervention. Thus far, that strategy has been unsuccessful.

The asbestos industry wants legislation creating a trust fund, with 50 percent of the fund's contributions coming from asbestos companies and their insurers and the remainder from the federal government -whose shipyard activities during World War II were responsible for about half of the asbestos exposures. Corporate contributions would be determined by the number of lawsuits filed against it. The Miller bill calls for a trust fund financed by industry and its insurers, with no federal contribution.

The Reagan administration opposes federal participation in asbestos compensation, arguing that it has no liability and adding that Washington already has played a major role in assisting workers disabled with asbestos diseases through Medicare, Social Security disability and veterans' benefit programs.

Statistics show that these federally subsidized benefit programs, as well as state worker compensation programs, are being used with increasing frequency to aid victims of chronic occupational-and environmental-related diseases -a purpose for which they were not designed.

"Social Security is now doing something it was never intended to do," says Miller. "It has become the primary source of compensation for occupational disease victims." As non-occupational toxic injury claims increase, the Social Security System and other assistance programs will be tapped by victims who have no other source of compensation.

That alarms many observers, who see the funds' solvency jeopardized and the burden of compensating victims shifted away from those responsible for the injury and onto the American taxpayer. Such a shift removes incentives to industry to eliminate the hazards. If those responsible can minimize their risks of liability, they can, in effect, simply factor in the cost of injury to workers and the general public as a price of doing business. Critics of the asbestos compensation plans claim they will do nothing more than "'institutionalize cancer."

Dr. Selikoff agrees. He believes that the volume of asbestos litigation -and sizable damage awards returned against asbestos makers -have done more for reducing exposure to the substance than any regulation. Shein also concurs. "A big jury verdict is great for the consumer," he says. "It puts fear in a company."

But sizable damage awards usually materialize in only one place: The courthouse. "Cases move when juries are in the boxes," says Shein. "You've got to get the cases before juries -that's the only way you'll get any money. Otherwise, the defendants are just earning interest on their money." And to get a case before a jury, the victim needs a lawyer and the defendant company needs a lawyer. And the legal time-clocks begin to tick.

Lawyers like Shein, who vigorously oppose moving the cases out of the courts, nonetheless are far from satisfied with the existing system. Appeals drag on for years, and in the absence of any conclusive appellate decision, lawyers are uncertain whether their interpretation of statute is correct. "We will try case after case on this (legal) theory and in four years we may try 100 cases and not know if we are right or wrong." Appeals should be decided within 90 days, he asserts, especially in cases like toxic torts where new legal ground is being broken regularly.

Is there a reasonable middle-ground for asbestos litigation? One possibility has been proposed in Congress and elsewhere to deal with other types of toxic tort lawsuits. That involves creating a two-tier system in which victims with injury claims may seek damages from a special compensation fund -financed by contributions from the makers of toxic substances. In exchange for a cap on the amount of benefits a victim is eligible to receive, the burden of proof of injury he must meet is relaxed, lessening the costs of filing and pursuing a claim and increasing his chances of winning compensation.

If the victim seeks additional compensation, he is entitled to then file his claim in a court of law. If successful in a court, he must reimburse the compensation fund. Such victim compensation legislation has been introduced in the Congress but has thus far not received widespread attention.

The asbestos industry has been exceedingly careful to date to keep its campaign for federal assistance and legislative relief separate from a general victim compensation reform, concerned that by combining the two its share of aid from Washington might be reduced.

Debate over asbestos compensation reform as well as compensation for other toxic substance victims will continue in the coming year, with no major reform imminent.

At the domed offices of Shein and Brookman, the packing cartons have been hauled away. Books and files are stored in their appropriate places. Clients -most of them from Philadelphia's blue-collar neighborhoods -climb up the front steps of the brownstone now to talk to their lawyers, and occasionally steal a glance at the posh new surroundings, financed in large measure by their injuries.

That is a situation that some people -including many in the legal profession -find troubling. Said one Philadelphia attorney who has followed the asbestos litigation: "We should be finding a solution rather than protecting ourselves and feathering our nest."